We couldn’t even reach Shrove Tuesday this year before news of another significant round of messaging-related penalties hit the headlines. The Securities and Exchange Commission (SEC) handed out $81m worth of penalties to 16 financial institutions – ranging from broker-dealers to wealth managers – on February 9, after a probe found employees used personal text messages for business purposes. It marks the latest round of penalties to emerge from regulators’ so-called WhatsApp investigations and, unfortunately, it doesn’t look like regulators are giving up the issuance of fines for Lent.

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It looks more probable that the number of penalties related to firms’ poor record-keeping practices could surge. If the Financial Conduct Authority’s warning in October is anything to go by, British firms could well be in the firing line over the coming months. But perhaps even more concerning is the possibility that watchdogs start to impose much heftier penalties. After all, the sheer number of fines levied on financial institutions over recent years could easily be interpreted as evidence they are ineffective deterrents. In 2023 alone, the SEC issued 784 enforcement actions to firms over messaging-related compliance failures, with the total value of penalties reaching a mammoth $5bn. Add that to the $4.3bn worth of fines doled out by the Commodity Futures Trading Commission in 2023 and it is clear to see why regulators may start to question the effectiveness of this approach. Nevertheless, whatever watchdogs do decide, one thing is certain: penalties are far more likely to gain zeros than shed them.

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Against this backdrop, compliance departments across the globe should be reconsidering their staff communications policies as a priority. They will ultimately be looking to establish an approach that safeguards their company against watchdog fines and any associated reputational damage, without impeding its efficiency or client appeal. The latter is where the greatest challenge lies, as imposing blanket bans on staff using instant messaging applications like WhatsApp can be detrimental to the way modern day financial professionals conduct business.

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With speed and flexibility synonymous with how people communicate in the post-pandemic world, a bank’s client base has the ultimate say over how its staff operate from a comms perspective. Unsurprisingly, most clients prefer to use instant messaging applications such as WhatsApp, which integrate seamlessly with their lives. As firms compete for increasingly digitally native clients, the ability to communicate in a manner that makes their life easier is not only preferable; it has become a commercial necessity.

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Moreover, taking too hard a line on instant messaging means firms could fall behind their competition. We recently onboarded a major South American bank that is now permitting 20,000 client-facing bankers to communicate directly with their client base over WhatsApp. This is increasingly becoming the norm in terms of client-banking communication across the region, and any firms that fail to align with this way of doing business could quickly see client and capital flee to the competition.

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Taking this into account, it seems the most sensible option for firms moving forwards is not to impose a ban on the use of SMS texts and WhatsApp, but rather to foster an environment that empowers and safeguards staff to use this technology to their advantage. To this end, deploying smart, always-on communications surveillance technology is paramount. VoxSmart’s leading mobile capture software, for instance, empowers compliance departments to easily collect, retain and analyse conversation data generated by employees around the clock. This not only keeps staff and clients happy, but – crucially – helps to throw increasingly frustrated watchdogs a bone.